I was looking at my oil and REIT heavy portfolio missing growth while stock market rised to unseen heights. I started to wonder where did I went wrong. Everyone is hitting the ceilings and im remaining at the bottom.
Then I started to investigate what was the main drivers for this stock market rally. In general it was major Tech companies: Apple +156%, Microsoft +64%, Google +39% and Facebook +59% YTD and we are only 8 months into 2020.
Their P/E ratios is even crazier Apple 41x, Microsoft 39x, Google 36x and Facebook 36x. Funny thing is that Google and FB is less overvalued then Apple and Microsoft who are bit more matured companies with paid dividends ect. APPL and MSFT dividend yields had droped below 1%. This is not normal. The whole world is betting on tech companies that we will all live only in our smartphones and PC due to covid. I don’t know this is super familier with stuff that was going on precicly 20 years ago – IT hype. Everyone is going digital.
I think with P/E of around 40x these top tech companies are clearly overevaluated and we will see dot-com 2.0. bubble bursting yet again some time soon. Looks like fed and stimulus money went most to these Hype tech companies. Did they grow their sales or EPS two time? No. In the close future? I don’t think so as well.
Billion dollar qestion – is this the peak? I think in some more month as everyone is rushing to buy their shares of Apple of Microsoft to have their +100% return in 2021. I’m not even talking about stock like Tesla. And everyone thinks they will outsmart one another.
Either way Im staying with my boring dividend portfolio 🙂